Dear Shareholders:
This Information Statement is furnished by the Board of Directors (the “Board”) of ScripsAmerica, Inc. (the “Company”) to inform shareholders of the Company of certain action adopted by the Board and approved by shareholders holding a majority in interest of the voting power of the Company. This Information Statement will be mailed on approximately May 8, 2014 to shareholders of record of the Company’s Common Stock as of April 25, 2014 (“Record Date”). Specifically, this Information Statement relates to the following:
1. On March 26, 2014 the Board adopted two resolutions: (i) a resolution to amend the Certificate of Incorporation of the Company to change the capital structure of the corporation by increasing the authorized shares of Common Stock of the Company from 150,000,000 to 250,000,000; and (ii) a resolution to adopt an Incentive Stock Option Plan.
2. Also on March 26, 2014 the Board referred both (i) the proposed amendment of the Certificate of Incorporation to shareholders for approval (with its recommendation for the approval of such amendment) and (ii) the proposed adoption of the Incentive Stock Option Plan to shareholders for approval (with its recommendation for the approval of such Incentive Stock Option Plan).
3. On April 16, 2014 ten shareholders holding a majority in interest of the voting power of the Company (52.088%) approved the amendment by written consent and as a result no further votes will be needed.
The filing of a Certificate of Amendment with the Delaware Secretary of State which will effect the foregoing amendment will not be done until a date which is at least twenty (20) days after the mailing of this definitive Information Statement. This Information Statement will be sent on or about May 8, 2014 to the Company’s shareholders of record on the Record Date who have not been solicited for their consent to this corporate action.
Pursuant to Delaware law, there are no dissenter’s or appraisal rights relating to the action taken.
1
PURPOSE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
To date, the Company has secured a substantial amount of its financial support from the issuance of convertible debt instruments. As time has gone by, the Company has issued shares upon the conversion of that debt by the lenders. In addition, from time to time the Company has entered into various settlement agreements and has issued shares of its Common Stock as consideration for the settlement. In addition, the Company must reserve shares for the potential conversion of the Series A Preferred Stock and can be expected to need to reserve additional shares in connection with future financings. Given all of these requirements for shares, the current level is inadequate. The increase in the authorized number of shares of Common Stock is expected to solve this problem for the foreseeable future.
PURPOSE OF ADOPTING INCENTIVE STOCK OPTION PLAN
The awarding of stock options to employees is a relatively standard form of compensation to attract and retain qualified and motivated personnel. A stock option plan which is qualified under the Internal Revenue Code is tax-advantaged for the employee and presumably more rewarding for the employee exercising options. Although the Company does not, at present, have any employees to whom stock options would be awarded, the Company is adopting such a plan at this point in order to meet the Internal Revenue Code requirement that the plan be approved by the shareholders within one year before adoption or within the year after adoption. Since the Company is mailing this Information Statement with respect to the amendment of the Certificate of Incorporation, it is cost effective to include the adoption of the plan at the same time. Accordingly, the Board recommended the adoption at this point in time.
This Information Statement is furnished by the Board of Directors (the “Board”) of ScripsAmerica, Inc. (the “Company”) to inform shareholders of the Company of certain action adopted by the Board and approved by shareholders holding a majority in interest of the voting power of the Company. This Information Statement will be mailed on approximately May 8, 2014 to shareholders of record of the Company’s Common Stock as of April 25, 2014 (“Record Date”). Specifically, this Information Statement relates to the following:
1. On March 26, 2014 the Board adopted two resolutions: (i) a resolution to amend the Certificate of Incorporation of the Company to change the capital structure of the corporation by increasing the authorized shares of Common Stock of the Company from 150,000,000 to 250,000,000; and (ii) a resolution to adopt an Incentive Stock Option Plan.
2. Also on March 26, 2014 the Board referred both (i) the proposed amendment of the Certificate of Incorporation to shareholders for approval (with its recommendation for the approval of such amendment) and (ii) the proposed adoption of the Incentive Stock Option Plan to shareholders for approval (with its recommendation for the approval of such Incentive Stock Option Plan).
3. On April 16, 2014 ten shareholders holding a majority in interest of the voting power of the Company (52.088%) approved the amendment by written consent and as a result no further votes will be needed.
The filing of a Certificate of Amendment with the Delaware Secretary of State which will effect the foregoing amendment will not be done until a date which is at least twenty (20) days after the mailing of this definitive Information Statement. This Information Statement will be sent on or about May 8, 2014 to the Company’s shareholders of record on the Record Date who have not been solicited for their consent to this corporate action.
Pursuant to Delaware law, there are no dissenter’s or appraisal rights relating to the action taken.
1
PURPOSE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
To date, the Company has secured a substantial amount of its financial support from the issuance of convertible debt instruments. As time has gone by, the Company has issued shares upon the conversion of that debt by the lenders. In addition, from time to time the Company has entered into various settlement agreements and has issued shares of its Common Stock as consideration for the settlement. In addition, the Company must reserve shares for the potential conversion of the Series A Preferred Stock and can be expected to need to reserve additional shares in connection with future financings. Given all of these requirements for shares, the current level is inadequate. The increase in the authorized number of shares of Common Stock is expected to solve this problem for the foreseeable future.
PURPOSE OF ADOPTING INCENTIVE STOCK OPTION PLAN
The awarding of stock options to employees is a relatively standard form of compensation to attract and retain qualified and motivated personnel. A stock option plan which is qualified under the Internal Revenue Code is tax-advantaged for the employee and presumably more rewarding for the employee exercising options. Although the Company does not, at present, have any employees to whom stock options would be awarded, the Company is adopting such a plan at this point in order to meet the Internal Revenue Code requirement that the plan be approved by the shareholders within one year before adoption or within the year after adoption. Since the Company is mailing this Information Statement with respect to the amendment of the Certificate of Incorporation, it is cost effective to include the adoption of the plan at the same time. Accordingly, the Board recommended the adoption at this point in time.
